Profit growth

Shares in Levi Strauss rose in the post-market after the clothing maker's financial results beat market expectations. Levi Strauss claimed benefits from its supply chain and promised a strong holiday quarter.

Shares in Levi Strauss (LEVI) rose 3.55% after the close of trading on Wednesday on the back of the release of strong third financial quarter results and forecasts for the fourth.

The $9.55bn US clothing brand has seen its shares rise strongly in the second half of 2020 and into May 2021, but the stock has fallen 20% in the past four months. Ahead of the report, Levi's shares closed down 5%.

Since the start of 2021, Levi's stock is up 20.7%.

Levi Strauss 3Q 2021 report

For the three months ended August 31, Levi Strauss reported a sharp rise in earnings per share to $0.48, above Wall Street analysts' average expectation of $0.37.

Total quarterly profit rose to $193m from $27m a year earlier.

Levi's 3Q revenues rose 36% (year-on-year) to $1.5bn, also beating market estimates of $1.48bn.

The company said strong consumer demand during the school season, the success of new denim models and the competitive advantages of its supply chain.

Levi produced and purchased clothing and materials in 24 countries, increasing sales thanks to Levi's diverse production structure. Vietnam's production is less than 4% of world production, but production capacity has been hit hard by temporary interruptions caused by the pandemic.

The company also noted growth in direct-to-consumer sales, lower prices for its products and growth in online sales, which have reached about 20% of Levi's total sales.

Levi Strauss forecast The company expects a strong fourth holiday quarter, in part due to sales of its new Beyond Yoga brand.

Levi completed its $400m acquisition of Beyond Yoga in the third quarter and expects sales of the brand, with its "body-positive and inclusive" philosophy, to generate $100m in revenue for the year.

The revenue growth forecast in the range of 20%-21% and earnings per share of $0.38-$0.40 for Levi's Q4 is above analysts' expectations.

The company forecasts annual revenue in the range of $1.43-$1.45 per share, with Wall Street forecasting of $1.33 per share. That means annual revenue will grow by more than 27%, and Levi's revenue will be close to 2019 levels.